The Power of Technology Sanctions

March 7, 2022 / Ben Bajarin

 As we look on and observe the absurdity of what is happening with Russia invading Ukraine, it has been fascinating to see most of the world power unite against a foreign power acting badly. I recall commentary from world leaders when Russia attempted to invade Georgia, and the message was clear that countries don’t invade other countries in the modern world. Yet, here we are as Russia attempts to expand its empire and world power again. There are many learnings from this war from the critical role of the internet to keep people informed and the threat of censorship to smartphones documenting yet again critical life moments. What is different this time around, and the observation I’d like to make is the role of the technology industry and the private sector in crippling Russia’s ambitions.

Sovereign nations uniting together will enforce sanctions by using the resources available to freeze assets, impact trade, and other strategies to weaken the bad actor. But what is fascinating about this particular conflict is the power the private sector, and largely big tech and beyond, have to use their influence and power to cripple the efforts of the bad actor dramatically. Private industry companies providing critical goods and services are unanimously stopping doing business with Russia. The impacts could be dramatic such technology sanctions led by the private sector have the chance to do more damage in thwarting Russia’s efforts than any efforts by governments.

In the past, it was not uncommon for the private sector to join forces with defense departments in times of war, usually at a contractual level, to provide the technology needed to win the fight. What we observe today, however, is the evolution of something akin to the United Nations but with technology companies rather than countries uniting to cut off access to their goods or services to an aggressor – in this case, Russia. This echoes basic principles of siege tactics, in which forces surround a city and cut off its trade route access, thus denying any goods to enter the city. This tactic has historically been used to cut off food from a city or nation, but we are now witnessing how the cutting off of critical technology to a country may achieve the same ends. What is developing is a new world of influence and power-driven by technology and technology companies.

Most companies and many not asked by their governments have gone above and beyond by cutting Russia off from their goods and services and doing what they can to help Ukraine. The list of technology companies playing some role in cutting off Russia is now well over two dozen. Another fascinating example has been SpaceX leveraging its massive satellite network to help Ukraine monitor Russian forces and provide valuable intelligence.  

Many companies, including Apple, Microsoft, Google, Netflix, and Samsung, are stopping sales of their products in Russia. An interesting tactic and one that can impact the underlying economy but will have more of an impact on citizens of the country than anything else. One interesting angle here is how this strategy could create more unrest among citizens who are frustrated with their government’s actions and create a wave of waining support or lack of confidence in their leaders and their actions.

Interestingly, the companies that can damage Russia are companies that provide critical components or infrastructure to a country. Particularly, semiconductor companies, like Intel, AMD,  Samsung, and TSMC have announced cutting off-chip and component supply to Russia. This can do some real damage to Russia’s cloud computing infrastructure and the vast need to maintain military equipment, oil refinery equipment, etc., which all require microprocessors, sensors, controllers, memory, etc. By being cut off technologically in this way, it could significantly cripple Russia’s continued efforts of invasion and impact the Russian economy in even more profound ways than anticipated.

Recognizing the power private industry technology companies have to cut off cutting-edge technology to a nation essentially could cause many countries to accelerate their technological sovereignty, which means their government-funded efforts to be self-sufficient to produce essential technology on their soil. Nearly every major nation understands the need for technological sovereignty, and in many ways, their efforts are as much offense as they are defense from a strategic standpoint.

From a US perspective, this is why it is so important to be producing a wide range of semiconductors on US soil. But it seems more nations understand their weakness when it comes to reliance on companies in other countries for cutting edge semiconductors and other vital components and are continuing to invest in local manufacturing of critical technology.

The importance of technology to the world, and as something that is at the underlying fabric of society, can not be understated at this point. This moment could be something of an inflection point, and perhaps a warning, of the power of private industry to go above and beyond any governments efforts to aid in war or thwart war and ultimately become a critical component of helping keep the peace–in other countries as well as their own.

 

 

 

 

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